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European stock indices are weaker across the board this morning. Investors are responding to last night’s sell-off on Wall Street which saw the majors close out on their lows. Not only that, but US stock index futures are weaker again this morning. Yesterday’s sharp reversal took many investors by surprise, particularly as the US session opened with fresh all-time highs for Facebook and the NASDAQ index.

Unfortunately for traders, much of yesterday’s move was down to political factors rather than market technicals. There are fears that the Trump administration won’t have enough votes to repeal and replace the Affordable Care Act when it goes to Congress tomorrow. There are thought to be around 26 Republican representatives who oppose their party’s new health care bill. This in turn could jeopardise Trump’s tax plan and this has worried investors who have watched equities soar on the promise of fiscal stimulus.

Meanwhile, the sell-off in crude oil continues. Last night the American Petroleum Institute recorded another large rise in inventories. For the week ending March 17th crude stockpiles rose 4.5 million barrels against expectations of a 2.8 million barrel increase. We’ll get an additional update from the US Department of Energy later today. A close below $48 for front-month WTI opens up the prospect of further losses. This in turn would weigh further on the energy stocks and banks linked to the sector.

Stock Market Update

Apple announces new products

Goldman Sachs begins staff relocation

Yesterday we were treated to a new line-up of Apple devices, along with a new app to capture some of the video-sharing market. The tech giant are releasing a new 9.7 inch iPad at a slightly lower asking price than the current models, seeking to tempt consumers with slightly tighter purse strings away from the competition. The new model will be available from $329 for the basic, 32GB Wifi-only version, with another model sporting the ability to use mobile data hitting the shelves at $459. Apple also introduced a special edition red iPhone 7 and iPhone 7 Plus, a colour the firm have not used since the iPod Nano. The new models will be available from tomorrow. Moving away from hardware, Apple are set to launch their competitor to Snapchat, an app called Clips, which allow users to create

Richard Gnodde, the European chief executive of Goldman Sachs, confirmed the investment bank are beginning to move hundreds of staff out of London before the UK leave the EU. The likely destinations will be in Frankfurt and Paris, where they already operate but will need to expand offices to handle the additional manpower. The bank stated they will still be keeping the vast majority of their 6,000-strong workforce within London, but no final decision has been made as to what the exact number will be.

Commodities Update

Gold and silver take full advantage of dollar weakness

Oil trickles lower as stockpiles rise again

With the selloff in the dollar, gold pounced at the chance to move on higher, touching three-week highs this morning as the safe haven becomes an attractive destination for investors shedding their risky assets. Tuesday marked the fourth consecutive session of gains for gold prices, with futures contracts trading hands just below the $1,250 level for the first time this month. Silver prices imitated moves seen in gold, with the dollar weakness aiding a solid jump in the futures market.

Crude oil took another hit as API inventories showed another big increase to US stockpiles. Despite all the efforts from the OPEC-led production cuts, little has changed in terms of prices with Brent just holding itself above $50 a barrel, with WTI trading around mid-$47 levels. As prices remain low, pressure mounts on OPEC to extend these production cuts further than initially stated, as the $100 a barrel days begin to fade into a distant memory. With crude trading at three month lows, we will look to stockpile data later on today to see if the official figures match up with APIs.

Forex Update

Strong inflation data gives pound a boost

Risk averse traders push dollar lower

The pound climbed ever higher yesterday, pushing UK shares lower as data showed British inflation rose faster than it has for more than three years, coming in above the Bank of England’s 2% target rate at 2.3% for the month of February. It is the first time since September 2013 that inflation has beaten the Bank’s target, leading traders to believe the BoE may soon be forced to reverse their rate cut of last August. This sentiment sent sterling flying, almost breaking through the $1.25 level against the US dollar. With talk of a possible rate hike as soon as May, eyes will be on the Bank of England for any indication of a move to prove the rumour mill right.

The dollar crashed down to four-month lows against the yen this morning as risk sentiment makes a swift reversal. The cause for concern comes as the Trump administration battles in Congress over Obamacare. As a President hell-bent on stimulating economic growth with his planned policies, it is concerning for investors that Trump is struggling to win over Congress at the first hurdle. The possibility of future struggles has led the markets to readjust their portfolios, ditching the dollar for safe havens such as the Japanese yen. Against the euro, the dollar is fairly flat, with the euro weakening slightly in the early hours. The dollar index remains below 100.

Upcoming Events

Amongst today’s significant economic data releases and events we have investors skimming through the latest ECB minutes, which came out this morning. We also have a German 10-year bond auction, the Housing Price Index from the US, the Swiss National Bank’s quarterly bulletin and the Royal Bank of New Zealand’s interest rate decision, which is expected to remain at 1.75%.

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